Company cars will still remain a sought-after employee benefit for many years to come _ despite increasing taxation levels _ but employers and drivers alike must focus more heavily on the overall value it can bring to the individual as opposed to the initial cost. That's according to a keynote speaker at a recent Fleet Industry Advisory Group (FIAG) Winter Workshop, where tax expert David Rawlings demonstrated how employee demand for company cars had remained remarkably resilient despite increases in benefit-in-kind taxation in recent years. While the Government has already announced annual rises in company car benefit-in-kind taxation up until the end of the 2019/20 financial year, Mr Rawlings insists firms need to look beyond the tax and focus on the overall value they bring to the individual. 'The percentage increases in tax look horrible, but in pound note terms company cars still deliver great value,î said Rawlings. 'When emissions-based company car benefit-in-kind tax was introduced in 2002, many pundits forecast the death of the company car.î But despite the decline in popularity for company cars since then, recent data from HM Revenue and Customs (HMRC) suggests the number of recipients has plateaued in recent years, standing at 940,000, yielding £1.29bn in benefit-in-kind tax and an additional £530m in employer Class 1A National Insurance in 2013-14. Mr Rawlings said that despite the move towards a CO2-based company car benefit-in-kind tax regime, and the frequent rise in tax thresholds, the inherent value of company cars to professionals remain entirely undiminished. Rawlings cited a working example prior to the new tax regime where the amount of tax due for a high-mileage, higher rate taxpayer per £1,000 of list price on a 2002 Ford Mondeo was £60; roughly equating to the tax owed by an employee driving a comparable low-emission model in 2016. 'Company car tax rates have increased, but we are where we were 14 years ago,î added Rawlings. 'I don't buy the arguments that tax has killed the company car, although what we don't know is where company car tax levels will end up.î Rawlings anticipates taxes increasing in the coming years with revenue raised supporting the development of alternative fuel technology and tackling the issue of air quality. 'Smart employers and company car drivers should focus on value rather than cost. The company car is, and will remain, one of the most sought-after benefits over the next 15 or 16 years,î concluded Rawlings.
